(Adds details, background, analyst comments)
By Bijoy Anandoth Koyitty
BANGALORE, Jan 12 (Reuters) - Israel-based software security company Aladdin Knowledge Systems Ltd ALDN.OALDN.TA said it agreed to be acquired by an investor group led by private equity firm Vector Capital for about $160 million, sending its shares up as much as 16 percent.
The offer price of $11.50 a share in cash represents a premium of about 20 percent over Aladdin’s closing share price of $9.60 on Jan. 9, the companies said in a statement.
“We believe this morning’s news should bring a smile to Aladdin shareholders’ faces,” Daniel Ives, an analyst with Friedman Billings Ramsey, wrote in a note to clients.
Oppenheimer & Co analyst Shaul Eyal said the $11.50 a share offer was fair and just.
Placing Aladdin’s DRM and authentication assets under common management with the firm’s portfolio company SafeNet makes considerable strategic sense, Vector Capital partner David Fishman said in the statement.
Vector Capital had made two failed attempts earlier in 2008 to acquire Aladdin, before cementing Monday’s deal that values the company at much less than its earlier bids.
Last October, Aladdin had received a non-binding proposal from Jasmine Holdco LLC, an affiliate of Vector, to buy all of Aladdin’s shares for $14.50 per share.
Prior to that, Vector had made $13 a share bid through SafeNet, a software security company, in August.
The bid, along with an alternative proposal to acquire Aladdin’s digital rights management (DRM) business for $125 million to $135 million, was rejected by the board.
“We believe Vector’s ability to combine Aladdin and SafeNet’s products underone roof should result in a much more efficient combined entity that will have a major stronghold on its digital rights management segment,” Ives said.
Aladdin’s ability to boost its top line as a standalone company has become more challenging, given the headwinds that the company is facing in the field, Ives said.
Aladdin’s DRM technology allows software publishers to avoid software theft and piracy, while the enterprise security solutions enable organizations to secure their assets by managing authentication and content security.
Shares of Aladdin have surged 37 percent to $9.62 at close on Jan. 6, following a news report that the deal was close to being finalised.
As of last Friday, they had lost about 25 percent of their value since Vector made its first bid in August. They were trading up $1.40 at $11.00 in morning trade on Nasdaq. (Reporting by Bijoy Koyitty in Bangalore; Editing by Anil D‘Silva)